2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Designing a Sustainable Model for Financial Viability of Decentralized Bio-fuel based Power Projects Debajit Palit & Ramit Malhotra The Energy & Resources Institute, New Delhi

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Acknowledgement The OASYS Project Objectives: Are there cost-effective and reliable off-grid electricity supply solutions that can meet the present & future needs, are socially acceptable, institutionally viable and environmentally desirable? Do these local solutions have the scaling-up and replication potentials and can these solutions be brought to the mainstream for wider electricity access in the developing world ?

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Electricity Situation in India  India is one of the fastest growing economies;  While 94% of the villages are electrified, around 290 million people still without access;  93.83% of total urban households are electrified  65.61% of total rural households have access  In 2001, Government of India declared the objective of ‘Power for All by 2012’;  Launched REST Mission in 2011, RGGVY in 2005, RVE in 2001 and VESP in 2004;  Chronic shortage of electricity supply

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Bio fuel program in India  India initiated biofuel production nearly a decade ago to reduce its dependence on foreign oil and improve energy security;  Launched National Mission on Biodiesel in 2003;  Program was mainly directed towards using the fuel as transport fuel;  Straight Vegetable Oils also are promising candidates for small scale power generation in rural areas;  VESP used SVO for power generation for remote villages ;  We are focusing here on experience and learnings from biofuel based power generation in the remote areas

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Village Energy Security Program (VESP)  Aim was to provide total energy security at the village level, through locally available resources like biomass, with full participation and ownership of community  Technologies used  Biomass gasifier  Bio fuel engines  Improved cookstoves  Biogas  Energy Plantation

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Some glimpses

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Research Objectives Design a sustainable model for financial viability of SVO based power projects Analysis from the perspective of all key stakeholders: – Project Implementing Agency - evaluate the techno-economic viability of SVO system based mini-grids to provide rural electricity services – Government - assess the financial burden of subsidies for making electricity affordable as compared to extending the central grid for rural electrification – Consumers - tariff within the payment capacity for availing the electricity services

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Possible mode of financing Possible financing Without subsidy With 90 % subsidy 30 % Equity70 % Debt 10% equity from PIA or community 10 % grant from state department

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Methods  Estimation of Minimum Desired Price (MDP) of electricity under different operating conditions for ensuring viability of SVO systems  Based on actual field performance data collected from a number of projects implemented under VESP  Finding MDP from a consumer’s perspective and viability gap analysis to estimate any gap  Possible mechanisms to bridge the gap and suggest breakeven price under different scenarios  Suggests an integrated approach for ensuring long term ‘sustainable electrification’ with SVO systems as an option in the remote rural areas

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Input parameters ParticularsUnitSVO system Capacity of engine generatorkWe10 Capacity of oil expellerLitres/hour10 Life of distribution networkYears30 Average load (of rated capacity)%40 Hours of operation per dayhours4 Distribution line network (average)Km2 Specific Fuel ConsumptionLitres/kWh0.35 Auxiliary consumption & technical loss%5 System cost (in thousands)INR375 Civil Shed (in thousands)INR200 Cost of PDN (in thousands )INR/km150 Interest rate on loan%11.25 Fuel (seed) costINR/kg6.00 Annual O&M cost (1st year)INR42000 Annual escalation in O&M & fuel cost%5 Discount rate%12

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany MDP from a SVO system Without subsidy With 90% subsidy Rated capacity (kWe) MDP (INR/kWh) MDP (INR/kWh) CUF MDP (INR/kWh) for 10 kWe SVO system 7% (Av 40% load) % (Av 40% load) % (Av 80% load) % (Av 80% load) % (Av 80% load )11.31 based on 33% CUF; $1 = INR 50

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Sensitivity analysis

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Required Tariff Scenario load (in kW) Dom -3 Com - 5 AV Load (kW)8 MDP INR/kWh14.67 Consumption - Dom (kWh/month), 4 h/d 360 Consumption - Com (kWh/month), 4 h/d 600 Required Tariff - Dom (INR/month) Income from Oil cakes (INR)960 Required tariff - Com (INR/kWH) 15.2 $1 = INR 50

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Effect of Productive Load  SVO based project will be economically viable if proposed commercial tariff is set at around INR15/kWh  Local micro-enterprises such as rice hauler may be reluctant to pay such high tariff, as it may not reduce their current expenses as compared to diesel

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany Integrated oil expeller - biogas system  Integrated SVO oil expeller-biogas system could be solution  Oil extracted using mechanical oil expeller is sold at market prices in the local market  Residual oil cakes are used as fuel in biogas digester  De-oiled cake price INR 1/kg, gas production of 0.5m 3 /kg cake, & power generation of 1 kWh per m 3 will result in  Unit cost of electricity generation ~ around INR 4 per kWh

2nd International Conference on Micro Perspectives for Decentralized Energy Supply February 27 – March 1,Berlin Germany In Conclusion The model has huge potential to generate employment through biofuel plantation and processing to enhance local income and at the same tome generate electricity to serve the same area Ecosystem Appropriate Technology Innovative Financing Local Skills Enabling Policy Sustainability condition